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Shortage of High-end LED Chip Supply May Loom Next Feb.

2010/12/22 | By Steve Chuang

Taipei, Dec. 22, 2010 (CENS)--Due to the rise of tablet PCs, the supply of high-end LED chips for the industry is likely to be short of demand starting February 2011 at the earliest, forecasts Frank Chien, chairman of Formosa Epitaxy Inc., one of Taiwan's leading LED makers.

Chien indicated that tablet PCs have quickly emerged as one of the most stellar products in the global market, which, like LCD TVs and monitors, mainly use LEDs as the light source for backlights, and confirmed that his company has started delivery of LEDs for the purpose since October 2010.

In addition to Apple's hot-selling iPad, which adopts LEDs supplied by Japan's Nichia and Toyoda Gosei, a great deal of tablets developed by other global PC vendors are scheduled for launch starting in early 2011, and most of which are built with Taiwan-made LEDs as backlights, according to Chien. Therefore, he said, it makes sense that shortages of LED chips, especially higher-end models, are very likely to loom then and linger throughout the year.

Aware of the possible LED shortages, some display panel makers have moved to secure their sources of supply. For example, Korea-based LG Display has joined hands with Taiwan's Amtran Technology Co., Ltd., a TV maker, and Formosa Epitaxy to set up a joint venture engaged in LEDs in China. The cooperation will not only help LGD to secure stable LED supply, but will also provide additional momentum to Formosa Epitaxy's business growth.

In the meantime, Amtran is worried about LED shortages in 2011, and stated that with selling prices going down, LED-backlit LCD TVs will replace traditional CCFL (cold cathode fluorescent lamp) TVs more quickly in the coming years than now, and, consequently, also use a large part of limited LED supply in the future. This implies that demand for LEDs will surely skyrocket along with more and more LED-backlit devices being put on product shelves worldwide.

To seize the market booms, Formosa Epitaxy has planned to add 15-20 sets of MOCVD (metal organic chemical vapor deposition) equipment to its Taiwan factory, and 25 sets in the LGD-Amtran-Formosa Epitaxy joint venture. The firm now produces 60% of its LED output for use in TVs, 15% in tablets and LED lightings each, and 10% for projectors and other devices. It will raise its equipment budget to NT$4-5 billion in 2011, and ambitiously challenge sales revenue of NT$7 billion in the year, which is 50% more than the corresponding figure to be achieved for 2010.